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THE INVESTOR
February 19, 2018

Stocks & Bonds

TES gets boost from 3-D NAND, OLED

  • PUBLISHED :October 17, 2016 - 17:25
  • UPDATED :October 17, 2016 - 17:49
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[THE INVESTOR] In the aftermath of the disbandment of Galaxy Note 7 by Samsung Electronics and alleged insider trading by Hanmi Pharmaceutical, many investors here suffered losses last week as most IT and drug-related shares plunged.

With the tech-heavy Kosdaq going downhill again on Monday, the market still looked bearish overall, but some investors that have been chasing TES, a provider of semiconductor equipment for major chipmakers, hurrahed. 

According to analysts’ forecasts on TES, the company is projected to obtain nearly 43 percent increase in its operating profit in the third quarter compared to the previous quarter.

“TES has entered a real growth stage,” said Kim Sang-pyo, an analyst at KB Investment & Securities in a report released on Monday. “The firm’s Q3 sales and operating profit are hovering above market forecasts by 8.3 percent and 28.9 percent each.”

“As new investments in 3D NAND flash will continue, the company will earn more in the second half of the year than the first half,” Kim added.

Recently weakened investment sentiment toward IT firms due to the Galaxy Note 7 scandal will have limited impact on TES, the analyst highlighted.

“While it is hard to deny that Samsung Electronics’ IT Mobile business will take a big blow from the production halt, the tech giant seems highly likely to push ahead with its 3D NAND business in order to offset the losses,” Kim said.

Kim offered a buy position for TES and set the target price at 26,000 won ($22.8).

Founded in 2002 in Yongin, Gyeonggi, the company became a major supplier for Samsung Electronics in just two years.

TES manufactures equipment for semiconductor, solar cells, display panels and opto electronics.

The firm’s plasma-enhanced chemical vapor deposition, known as PECVD under the brand name Challenger HT Series, features multi-process capability, optimized energy savings, easy maintenance and low cost.

“As Samsung and SK Hynix are going to ramp up investments in 3D NAND in 2017, demand for the PECVD equipment will rise,” said Noh Guen-chang, an analyst at HMC Investment & Securities.

“Also, new demand for the firm’s opto equipment from local chipmakers and OLED equipment from China will drive external growth further.”

The company has been supplying the PECVD for local chipmakers. If it starts to supply opto equipment both for DRAM and 3D NAND, the growth momentum would double current market forecasts, Noh added.

TES is currently supplying the opto equipment for Tokyo Electron.

The firm’s OLED business is centering on the Chinese market. It is now providing equipment for EverDispaly and CSOT.

“Since Chinese display makers are expanding investments in OLED panels, new orders from China would be made soon,” Noh said.

By Song Su-hyun/The Korea Herald (song@heraldcorp.com)
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